Back to top

Site C dam: The best option for new energy BC doesn’t need

May 18, 2014
Photo credit Graham Osborne

On May 7th, the Joint Review Panel considering BC Hydro’s proposed Site C dam on the Peace River issued its final report. Its conclusion was clear: Site C would have significant environmental and social consequences that would be unfairly borne by locals, those costs could only be justified by an unambiguous need for its power, and BC Hydro has failed to prove that we need that energy, at least not on the timelines it proposed.

First identified as a potential site for hydroelectric development in the 1950’s, Site C was reviewed by the BC Utilities Commission in 1983, which recommended that the project be shelved until BC needed its energy and BC Hydro explored other options. In 2012, the federal and provincial governments commenced a joint environmental assessment of the proposed dam and appointed the Panel to hold public hearings and inquire into its environmental, economic, social, health and heritage impacts.

A series of grants from our Environmental Dispute Resolution Fund (EDRF) helped the Peace Valley Environment Association (PVEA) intervene in the environmental assessment of Site C that commenced in 2012, and I, along with my EDRF-funded co-counsel Tim Howard, represented them throughout the process.

We are pleased to note that the Panel agreed with a number of our points, including our core argument, which we summarized in our final submissions to the Panel in February 2014 as follows:

The PVEA’s message to this Panel is, at its core, a simple one. The Peace River valley is an irreplaceable natural asset. There is only one Peace River valley, and its soils, habitat and beauty can never be regained once it has been dammed and flooded. Such a loss should only be incurred if it is demonstrably clear that the larger public good will be served by that loss – if, in plain terms, it is absolutely necessary to do so. And the PVEA submits that BC Hydro has failed to meet that test. By any objective measure, the Site C dam is not needed, and is not the most cost-effective and least environmentally damaging means of meeting BC’s future energy needs.

The Joint Review Panel Report makes some strikingly similar conclusions to ours (which the BC Utilities Commission first drew over 30 years ago). While the Report sets out a suite of recommendations regarding measures that should be taken should the provincial and federal governments decide to approve the project, its ultimate conclusion is fourfold:

  1. Site C would have significant environmental and social costs, to fish, wildlife, plants, residents and users of the Peace Valley, First Nations, and archeological, historical and paleontological resources;
  2. Justification for Site C “must rest on an unambiguous need for the power, and analysis showing its financial costs being sufficiently attractive as to make tolerable the bearing of substantial, social, and other costs;”
  3. BC Hydro has not proven that BC will need Site C’s energy, at least not as soon as BC Hydro has claimed; and
  4. Even if BC needs additional energy at some point in the future, it may be possible to get that power from alternative sources like geothermal, which BC Hydro has been precluded from adequately exploring due to provincial policy constraints.

Those findings were somewhat buried among a number of recommendations to the federal and provincial governments should they allow the project to proceed despite the Panel’s cautions, which helps explain why, in the first flurry of media following the Report’s release, were a number of confused, and in some instances misleading, media accounts of the Panel’s position. Some articles claimed that Panel did not clearly recommend one way or another whether BC Hydro should be allowed to build the dam, and CBC incorrectly reported that the Panel concluded the project’s benefits outweigh its costs.

But as a closer reading of the Report reveals, the Panel found that BC Hydro has not provided sufficient assurance that Site C is required to meet BC’s future energy needs to justify its massive environmental, social and economic costs, and that a more in-depth examination into BC Hydro’s figures and the provincial policy constraints shaping BC’s energy needs should occur before the provincial and federal governments contemplate approving the project.

Significant costs of Site C

Site C, which would join the WAC Bennett and Peace Canyon dams as the third major hydroelectric facility on the majestic Peace River, would flood an 83 km stretch of the Peace River Valley, destroy almost 16,000 acres of farmland and displace residents, some of whose families have been homesteading there for generations. Unsurprisingly, the Panel found that a host of Site C’s social and environmental impacts would be significant.

The Panel assessed the project’s impacts on the aquatic environment, fish and fish habitat, vegetation and ecological communities, wildlife resources, current use of lands and resources for traditional purposes, asserted or established aboriginal and treaty rights, land and resource use, community life, human health, heritage resources and greenhouse gas emissions. It also examined how those effects would combine with the other human activities that have, are and will continue to impact the landscape, determined the significance of those cumulative effects and recommended ways to avoid, mitigate or offset those harms.

The Panel’s conclusions about Site C’s most significant effects are found in its reflections at page 307:

Site C is not an ordinary project. At $7.9 billion, it might be the largest provincial public expenditure of the next twenty years. In the long run, it would provide a large increment of inexpensive firm power at a low cost in greenhouse gases, an attribute whose value will only grow with time... How one regards the economics of a large capital-intensive project depends on how one values the present versus the future...

Site C would seem cheap, one day. But the Project would be accompanied by significant environmental and social costs, and the costs would not be borne by those who benefit. The larger effects are:

•         Significant unmitigated losses to wildlife and rare plants, including losses to species under the Species at Risk Act and to game and plant resources preferred by Aboriginal peoples;

•         Significant unmitigated losses to fish and fish habitat, including three distinct sub-groups of fish preferred by Aboriginal peoples, one of which is federally listed as a species of special concern;

•         Losses of certain archaeological, historical and paleontological resources [sic]

•         Social coststo farmers, ranchers, hunters, and other users of the Peace River valley; and

•         Forced changes to the current use of lands and waters by signatories to Treaty 8, other First Nations and Métis, whose rights are protected under article 35 of the Constitution Act, 1982.

These losses will be borne by the people of the Valley, some of whom say that there is no possible compensation. Those who benefit, once amortization is well underway, will be future electricity consumers all across the province.

The Panel held that the cumulative effects of these impacts, both in combination with each other and when considered in the context of the multiple agricultural, silvicultural and industrial developments in the area, would not just diminish biodiversity in the Peace Region, but result in a loss to world biodiversity and heritage. Indeed, it recommended that, whether or not Site C proceeds, due to the rapid pace of development in the Peace, one or both governments undertake a regional cumulative effects study and establish environmental thresholds for the region.

In the case of agriculture, even though the Panel found that the loss of production would not be significant in the broader provincial and western Canada context, it did conclude that the loss of not only food production but especially farmlands, which in some cases has been in families for generations, “would be highly significant to the farmers who would bear the loss, and that financial compensation would not make up for the loss of a highly valued place and way of life.”

Finally, with a $7.9 billion price tag, the Panel noted that Site C could be “the largest provincial public expenditure of the next twenty years.”

In short, the Panel came to the unsurprising conclusion that Site C would cost significant environmental, social and economic hardships, not all of which we can confidently foresee.

Those losses only justified if energy needs are “unambiguous”

While the Panel did not explicitly recommend whether or not the provincial and federal governments ought to approve Site C, it did caution against giving the project an automatic green light, given the significance of its costs. It stated:

The Panel was asked to present evidence that could lead to the justification of the environmental, social, economic, health, and heritage costs of the Project. Those costs are large, and governments in the past have been cautious about licensing projects with significant adverse residual effects. Justification must rest on an unambiguous need for the power, and analyses showing its financial costs being sufficiently attractive as to make tolerable the bearing of substantial environmental, social, and other costs. [308]

The test for whether BC Hydro should be allowed to build with Site C, then, is an “unambiguous need” for the energy it would provide. Without conclusive proof that BC will need Site C by the time it would start operating, the dam’s approval cannot be justified.

Energy needs are not proven (in the short or long term)

The assessment Terms of Reference required BC Hydro to describe the “need for” Site C, which in environmental assessment-speak means a project’s fundamental justification, its “business case” or “rationale for proceeding with the development at this time, within the relevant legal and policy context.” In other words, why build this dam, rather than a smaller one, or a bunch of wind farms, or tighten our electricity-belts and build nothing at all?

Assessing actual “need” twenty years into the future (when Site C would come online) is a complex exercise. During that time public policy shifts, changes in the economic landscape affecting demand, plus unforeseen strides in the development and use of alternative energy sources could fundamentally change the long-term need for the project, leading the Panel to refer to long-term utility forecasting as “an heroic exercise.” Will LNG in BC stall, sucking less energy from the grid than BC Hydro assumed in its forecasting? Will rate increases result in a drop in demand? Will Vancouverites have largely switched to solar in the city’s quest to be crowned ‘Greenest City in the World’?

Ultimately, the Panel found that that better “demand-side management” (investment in energy efficiency rather than new power generation), or supply from other, better sources, may be able to stave off any need for the additional power Site C would provide for years:

One major alternative should have been fully characterized many years ago. In 1983, the BC Utilities Commission advised BC Hydro to explore the promising geothermal resources in the Coast Range, near the load center. Little has been done. Since then, new geothermal resources have been discovered in the sedimentary rocks of northeast BC. BC Hydro now says 700 MW of firm power via geothermal resources may be available at competitive prices. They are, however, forbidden by policy to develop it. Development is reserved for independent power producers, none of whom have bid geothermal projects into the recent calls for proposals.

There are a number of other renewable alternatives available at costs comparable to Site C, but these have been only roughly costed in the Environmental Impact Statement. As a matter of public policy, BC Hydro is not allowed to develop them and so has not invested much in exploration, research, and engineering. The consequence is that there is less confidence in the costs of the alternatives than with Site C; likewise, the understanding of the environmental costs of alternatives is necessarily generic.

It recommended that regardless of whether Site C is built, BC Hydro establish a budget for researching and developing other solutions to BC’s energy needs, such as geographically diverse renewable resources and conservation techniques. It also suggested, however, that this responsibility should fall on governments:

It might be objected that because BC Hydro is required as a matter of policy to leave geothermal energy to the private sector it should not be saddled with the costs of resource characterization. Indeed, if the senior governments were doing their job, there would be no need for this recommendation. Perhaps they should pay for the work. In any case, useful information can be made available to IPPs on a cost-recovery basis in manner analogous to the trading of geophysical information in the oil and gas trade.

In the end, the Panel found that BC Hydro failed to prove that Site C is the answer to BC’s energy needs. It also questioned the credibility of some of BC Hydro’s calculations, describing its equity as “largely fictional” and its definition of its capital cost as “an accounting marvel”.

The Panel recommended “that BC Hydro construct a reasonable long-term pricing scenario for electricity and its substitutes” and expose both its cost and load forecasts, as well as its demand side management plan details, to the BC Utilities Commission for public and Commission scrutiny.

We were particularly pleased with this last recommendation, which echoes the requests we and PVEA formally made in July 2013, both in a complaint filed with the BCUC and an open letter submitted with our allies to provincial decision-makers.

Normally, Site C would have to undergo an in-depth review by the Utilities Commission, but the provincial government interfered with this process by passing an Order-in-Council and a provision in the Clean Energy Act that exempt the proposed project from this customary regulatory review. The BC government explained the exemption as regulatory “streamlining”, but as the Panel discovered, a review by the Utilities Commission is necessary to fill in the significant gaps in our understanding of the true need for and costs of Site C.

Alternative energy solutions, and why BC needs to rethink its policy constraints

The Panel recognized that BC Hydro was hoping, through Site C, to meet its forecast energy needs in accordance with relevant B.C. laws, regulations and government policy statements.

This last bit is key: both BC Hydro and the Panel were severely limited in their consideration of the possible alternatives to Site C that might fill BC’s future energy needs at lower social, environmental and economic costs.

As a Crown corporation, BC Hydro is bound by public policy in ways private proponents are not. For example, BC Hydro must follow the BC Energy Plan, a government document that sets out the province’s general energy policies, and in 2013 it had to submit for approval its Integrated Resource Plan, a 20-year proposal for how it plans to keep BC’s lights on. Every year, the province writes the utility a “Letter of Expectations” that provides direction on how BC Hydro must conduct itself, including by “ensuring that its priorities reflect Government’s priorities.”

While it was outside the Panel’s mandate to assess alternatives that are off-limits due to provincial policy, it nonetheless did criticize some of those policies and suggest that relaxing these requirements might hold off the “need for” Site C for some time, or perhaps avoid it altogether.

BC’s Clean Energy Act, for example, requires that the province be energy self-sufficient, which the Special Direction No. 10 to the British Columbia Utilities Commission Regulation defines as meaning that BC Hydro must be able to meet all its supply obligations solely from generating facilities within B.C. The Panel cautioned that a literal interpretation of this requirement would mean “a B.C. disconnected to the outside world, a vision of autarchy truly strange for a province that relies on trade”.

It also questioned the provincial policy of not drawing on its energy entitlement under the Columbia River Treaty, recommending instead that B.C. use the power it is entitled to rather than “wholesale” it to U.S. utilities. Relaxing such policies could hold off the “need for” Site C for years, or perhaps avoid it altogether. In other words, it is possible that Site C’s harms could be avoided by the stroke or two of a pen.

In a nutshell

The Joint Review Panel Report was clear: while Site C would provide relatively low-cost energy that BC may need at some point in the future, BC Hydro has not proven that need is imminent, there are a number of uncertainties about BC Hydro’s assessment of the project’s costs and need that should be better understood before any decision is made, and other clean energy sources with less devastating impacts could potentially meet BC’s future energy demands, but for the provincial policy constraints that prevent BC Hydro from exploring those options.

In other words, Site C would only benefit BC, albeit at significant environmental and social costs, if the province actually needed its energy, which it may not. That’s a big if, given its exceedingly high environmental, social and fiscal costs.

Normally, Site C would have to undergo an in-depth review by the Utilities Commission, but the provincial government interfered with this process by passing an Order-in-Council and a provision in the Clean Energy Act that exempted the project from this customary regulatory review. The exemption is meant to "ensure alignment between the government’s policy priorities, how BC Hydro delivers on those priorities, and how the BCUC provides regulatory oversight.” The question is, which is a higher priority: pushing Site C through, or ensuring that ultimate decisions on this complex matter are based on a fulsome understanding of its potential costs and benefits (in other words, looking before we leap)?

At its core, the Report’s message is that the dam should be a last resort. Given what is at stake (expropriation of lands, the shouldering of a significant financial burden, not to mention risk, by B.C. ratepayers, and the permanent drowning of a majestic river valley), the provincial government should send the project before the BC Utilities Commission and give second sober thought to whether better policies may give rise to better alternatives.

By Anna Johnston, Staff Lawyer